By Elena Vardon

NatWest expects income and returns to hit the upper end of guidance this year after loan growth and structural hedges lifted the high-street bank's earnings above market views.

The British lender said Friday that it now forecasts total income excluding notable items for 2025 to be closer to 15.7 billion pounds ($20.85 billion) than to 15.2 billion pounds as loan growth and structural hedges continue to mitigate the impact of interest-rate cuts by the Bank of England.

The London-listed group also nudged up its return on tangible equity forecast--a key measure of profitability--which it now expects will touch the higher end of its 15%-16% range after reporting a first-quarter return of 18.5%. It reiterated its target of a greater than 15% return for 2027.

"In the face of increased global economic uncertainty, our customers remain resilient and we saw good levels of activity through 1Q," Chief Executive Paul Thwaite said.

NatWest reported total income of 3.98 billion pounds for the three months ended March 31, 14.5% higher on year and beating estimates taken from a company-compiled consensus of 3.84 billion pounds.

Net interest income--the difference between what banks earn on loans and what they pay out on client deposits--contributed 3.03 billion pounds compared with consensus expectations of 2.99 billion pounds on deposit margin expansion. Group net interest margin for the quarter was 2.27%, against a 2.23% forecast and 2.19% a quarter prior.

Pretax profit jumped 36% on year to 1.81 billion pounds--surpassing a 1.565 billion-pound estimate--due to the increase in income and slightly lighter costs despite an increase in provisions for bad loans.

The U.K. government, whose stake in the group resulted from a crisis-era bailout, is edging closer to returning the bank to private ownership. This week it trimmed its stake further to just under 2% from around 3%, according to a regulatory filing published Friday.

Shares opened almost 4% higher at 494 pence, with analysts highlighting another solid set of results.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

May 02, 2025 03:04 ET (07:04 GMT)

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